The Dow Jones industrial average was up 85 points, or 0.63%, at 13,596. The Standard & Poor's 500 Index was up eight points, or 0.56%, at 1,481. The Nasdaq Composite Index was up 18 points, or 0.59%, at 3,136.

Shares gained after data showed that the number of Americans filing new claims for unemployment benefits declined to a five-year low last week and housing starts surged last month to the highest since June 2008.

A separate report showed that manufacturing in the Philadelphia region unexpectedly shrank in January, showing how companies are becoming more concerned about across- the-board US government spending cuts that could slow growth.

Gains in the shares yesterday were tempered by weakness in the financial sector as Bank of America's fourth-quarter profit fell as it took more charges to clean up mortgage-related problems. Citigroup posted $2.32 billion of charges for layoffs and lawsuits. While BofA was down 4.2%, Citigroup was off 2.9%.

Elsewhere, Intel shed 5.2% in extended-hours trading after the company forecast quarterly revenue that fell short of analysts' expectations.

Energy shares led gains on the Dow after US crude oil prices jumped more than 1%. Shares of Exxon Mobil were up 0.8%, while Chevron added 0.7%.

In Asia, shares gained on Friday in afternoon trade after an upbeat Chinese economic data confirmed a recovery was on track in the world's second largest economy and the yen traded near a 30-month low.

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